Dairy prices soar in overnight auction

File photo

Prices for milk powder in Fonterra's online global auction jumped 7.1 per cent overnight, led by a 20.6 per cent increase in the cost of butter milk powder.

The average selling price across the four different products traded through the auction platform was $3908.

The price of whole milk powder climbed 3.8 per cent to the highest level since June last year of US$3750 a tonne.

This comes amid a demand for commodities during Christmas and New Year and as flooding in Queensland destroys wheat crops, boosting feed costs.

Skim milk powder prices were up 10.9 per cent, while anhydrous milk fat gained 10.6 per cent.

Whole milk powder was up 3.8 per cent but it was butter milk powder, up 20.6 per cent, which underpinned the rise, as the last of the product was sold for the year.

GlobalDairyTrade manager Paul Grave said trading was in part driven by lingering concerns that New Zealand could be a "drought scenario".

"In our next trading session the volumes on offer are starting to decline as we move into the off-season and buyers are looking to ensure the security of their supply," he said.

- NZ HERALD ONLINE with BusinessDesk